Sales mix is generally defined as the relative distribution of sales among the various
products sold.
a. True
b. False
Which of the following are present value methods of analyzing capital investment
proposals?
a. internal rate of return and average rate of return
b. average rate of return and net present value
c. net present value and internal rate of return
d. net present value and payback
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices
are $55, $78, and $32, respectively. The variable costs for each product are $20, $50,
and $15, respectively. Each product must go through the same processing in a machine
that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours;
and Wales 1 hour.
What is the contribution margin per machine hour for Bales?
a. $5
b. $7
c. $35
d. $28
At EOM Inc., the beginning inventory is 20,000 units. All of the units manufactured
during the period and 16,000 units of the beginning inventory were sold. The beginning
inventory fixed costs are $50 per unit, and variable costs are $300 per unit. Determine
(a) whether variable costing income from operations is less than or greater than
absorption costing income from operations, and (b) the difference in variable costing
and absorption income from operations.
The cost of production of completed and transferred goods during the period amounted
to $540,000, and the finished products shipped to customers had total production costs
of $375,000. The entry to record the transfer of costs from work in process to finished
goods is
a. Finished Goods Work in Process 375,000
375,000
b. Finished Goods Work in Process 540,000
540,000
c. Work in Process Finished Goods 540,000
540,000
d. Work in Process Finished Goods 375,000
375,000
If the standard to produce a given amount of product is 600 direct labor hours at $15
and the actual was 600 hours at $17, the rate variance was $1,200 unfavorable.
a. True
b. False
In a lean environment, process problems are less visible than they are in a traditional
environment.
a. True
b. False
It is beneficial for divisions in a company to negotiate a transfer price when the
supplying division has unused capacity in its plant.
a. True
b. False
In computing the rate earned on total assets, interest expense is subtracted from net
income before dividing by average total assets.
a. True
b. False
In a job order cost accounting system, the entry to record the flow of direct materials
into production is
a. to debit Work in Process, and credit Materials
b. to debit Materials, and credit Work in Process
c. to debit Factory Overhead, and credit Materials
d. to debit Work in Process, and credit Supplies
In a lean environment, process problems are more visible than they are in a traditional
environment because:
a. inventories are maintained at higher levels.
b. process problems cause production to shut down immediately.
c. the push manufacturing system leads to increased inventory level.
d. the lack of work in process inventory creates problems.
Equivalent production units are generally determined for
a. direct materials and conversion costs
b. direct materials only
c. conversion costs only
d. direct materials and direct labor costs only
An increase in the accounts receivable turnover may be due to an improvement in the
collection of receivables or to a change in the granting of credit and/or in collection
practices.
a. True
b. False
In contribution margin analysis, the quantity factor is computed as the difference
between actual quantity sold and the planned quantity sold, multiplied by the planned
unit sales price or unit cost.
a. True
b. False
In the absorption costing income statement, deduction of the cost of goods sold from
sales yields contribution margin.
a. True
b. False
Dotterel Corporation uses the variable cost concept of product pricing. Below is cost
information for the production and sale of 35,000 units of its sole product. Dotterel
desires a profit equal to an 11.2% rate of return on invested assets of $350,000.
The dollar amount of desired profit from the production and sale of the company’s
product is
a. $89,600
b. $39,200
c. $70,000
d. $84,000